Business | Economy

Rents and food drive Qatar inflation to 13.7%

Inflation in Qatar rose slightly to 13.74 per cent at the end of December, its second-fastest pace on record, as rents and food prices surged in the Gulf state that is adopting price controls to curb price rises.

Reuters

Published: 01:26 February 17, 2008

Dubai: Inflation in Qatar rose slightly to 13.74 per cent at the end of December, its second-fastest pace on record, as rents and food prices surged in the Gulf state that is adopting price controls to curb price rises.

Inflation across the Middle East has been rising mainly because of surging demand for housing and office space as the economy has expanded, spurred by a near five-fold increase in oil prices since 2002.

Rents and utility costs, which comprise one category in the Qatar index, rose 27.7 per cent in the fourth quarter, compared with 28.8 per cent in the previous three months, according to data from the General Secretariat for Development Planning.

Food, beverage and tobacco costs in Qatar, which pegs its riyal currency to the dollar, climbed 10.5 per cent, accelerating from 6.59 per cent in the previous quarter, the data showed.

The general index was at 159.34 points at the end of December, compared with 140.09 points a year earlier - its second-fastest pace of growth on record, the data showed. Inflation in Qatar was 13.73 per cent at the end of September.

Qatar could lower a cap on rent increases that landlords can charge by three percentage points to 7 per cent, the local Peninsula newspaper reported last week.

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The country enacted a new rent law on Friday to help protect tenants rights, the same paper reported on Saturday.

Inflation in Qatar, holder of the world's third-largest natural gas reserves, hit a record 14.81 per cent at the end of March last year.

Dollar peg

Like most other Gulf states, Qatar's dollar peg forces it to track US monetary policy at a time when the Federal Reserve is cutting interest rates to help the US economy ward off recession.

Qatar gets about 50 per cent of its imports from the euro zone, according to Calyon Credit Agricole, raising import costs as the dollar slid to record lows versus the euro and a basket of major currencies in the fourth quarter.